GGAL — Grupo Financiero Galicia S.A.

Summary of Grupo Financiero Galicia Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Net Income: ARS 196 billion for 2025, a significant decline of 91% year-over-year, translating to a 0.4% return on average assets and a 2.5% return on average shareholders' equity. Excluding integration expenses, net income would have been ARS 333 billion with a ROE of 4.2%.
• Q4 Performance: Net loss of ARS 84 billion, with Banco Galicia reporting a loss of ARS 104 billion. Financial margin improved but was offset by asset quality deterioration.
• Loan Portfolio: Peso-denominated loans averaged ARS 87.6 trillion, up 10.4% quarterly and 73% annually. Dollar-denominated loans were $18.2 billion, down 0.5% quarterly but up 83.6% annually.
• Deposits: Total deposits reached ARS 26 trillion, a 4% increase from the previous quarter, with dollar-denominated deposits increasing by 6%.

2. Strategic Updates and Business Highlights

• The bank is focusing on improving asset quality and efficiency post-merger with HSBC, with expectations of stabilizing NPLs and improving cost of risk in 2026.
• Strategic emphasis on commercial lending, particularly in sectors such as agribusiness, oil and gas, and automotive, while being cautious with consumer lending.
• The bank plans to maintain or increase market share despite a slower growth pace in the first half of 2026.

3. Forward Guidance and Outlook

• 2026 Projections: GDP growth expected at 3.7% and inflation at 23%. Loan growth projected at 25%, with a slower pace in the first half of the year and acceleration anticipated in the second half.
• ROE guidance for 2026 is set between 10% and 11%, with expectations for improvement in profitability as credit quality stabilizes.
• Dividend proposal of ARS 190 billion, subject to Central Bank approval.

4. Bad News, Challenges, or Points of Concern

• Significant asset quality deterioration, with NPLs in the retail portfolio rising to 14.3% from 3.2% year-over-year, primarily affecting personal loans and credit card financing.
• The financial margin was negatively impacted by increased loan loss provisions and changes in reserve requirements, alongside higher interest rates affecting funding costs.
• Concerns about inflation and its potential impact on the bank's profitability and loan demand, with a warning that unexpected economic conditions could hinder growth.

5. Notable Q&A Insights

• Management confirmed that while they expect to maintain market share, growth may slow in the first half of 2026 due to economic conditions and asset quality issues.
• The cost of risk is expected to decrease from 12.5% in Q4 2025 to around 8% by the end of 2026, contingent on economic recovery.
• There is cautious optimism regarding regulatory changes allowing dollar lending to non-dollar revenue-generating entities, with management indicating a selective approach to such lending.
• The bank is focused on improving operational efficiency, with a target of reducing administrative expenses by 10-11% year-over-year, excluding one-off costs from the previous year.

This summary encapsulates the essential financial metrics, strategic initiatives, forward-looking statements, challenges, and insights from the Q&A session, providing a comprehensive overview of Grupo Financiero Galicia's current standing and future direction.